New CEO at Duane Reade; D’Arezzo resigns

4/21/2008

NEW YORK —Manhattan-based pharmacy retailer Duane Reade has tapped former Loblaw Cos president John Lederer to serve as its new chairman and chief executive officer, an appointment viewed by some industry observers as a positive move that will position Duane Reade for growth.

Filling the top spot vacated by Rick Dreiling in late January is Lederer who, from 2001 to 2006, served as president of the Canadian supermarket chain with more than 1,000 corporate and franchise stores under various operating banners.

During his 30-year career at Loblaw and its subsidiary companies, Lederer has held many senior positions throughout the organization, including executive vice president responsible for merchandising, operations and profit performance of all Loblaw businesses in eastern Canada.

The hiring of a longtime supermarket executive from Canada may have taken some industry members by surprise, but at least one analyst sees the move as a positive, as Duane Reade works to turn around the chain.

“He was a key player in a lot of the innovation, and he was a significant contributor to that company being viewed very favorably globally as an innovative, world-class food retailer with significant growth and good market share gain,” said one Loblaw analyst.

In September 2006, there was a management shake-up at Loblaw, and Lederer stepped down as president by mutual agreement. Some viewed the shake-up as unnecessary, while others viewed it as overdue.

Lederer had been in the midst of transforming the supermarket chain to combat the threat of Wal-Mart. However, there were reportedly some snags in the reorganization of the supply system, which dealt a blow to the bottom line.

Under Lederer’s leadership Loblaw grew its reported annual sales from $20 billion Canadian in 2000 to more than $28 billion Canadian in 2006.

John’s demonstrated ability to define and guide important strategic initiatives and unit expansion programs will allow the company to accelerate its next phase of growth,” stated Tyler Wolfram, a director of Duane Reade and a partner of Oak Hill Capital Partners.

Dreiling, who left Duane Reade to take the helm at Dollar General, left in place a turnaround plan he implemented in March 2006. To date, the no-frills plan, dubbed Duane Reade Full Potential, has helped the chain improve operations and increase market share. While it is unclear at this point if Lederer will forge ahead with the plan, some observers remain confident in Lederer’s abilities.

“I have been watching with interest what has been going on post the private-equity ownership, and I have noticed some simple improvements at the store level,” said the Loblaw analyst. “Although, I would say they have a long way to go and, luckily for Duane Reade, John has the expertise in retail merchandising that I believe would bring to bear a lot on the business model.”

Just days after the Lederer announcement, Duane Reade revealed that David D’Arezzo, senior vice president and chief marketing officer, had resigned effective April 17. D’Arezzo has assumed a senior position at Houston-based Grocers Supply Co.

Since Dreiling’s departure, D’Arezzo had served as interim chief executive officer.

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